A NEW WAY AT WARDS
Byline: Rusty Williamson
DALLAS — One year after emerging from Chapter 11 bankruptcy, Wards is fighting to rebound from slumping sales, a fractured merchandising focus and frumpy, dimly lit stores.
The $3.2 billion company, which has dropped the Montgomery moniker from its store name to portray a modern image, believes it can turn things around thanks to a $100 million infusion of capital from parent bank GE Capital and an ambitious store remodeling program that devotes more space to fashion, plays up trends and courts a younger customer.
While many industry observers have given the Chicago-based chain a gloomy prognosis, Wards’ executives are making it clear that they’re fighting for more than the chain’s survival.
They’re crafting an agenda to ensure that Wards, creator of America’s first mail-order catalog in 1872, will once again become a major retail contender. But Wards’ top executives, in an exclusive and candid interview with WWD late last week, acknowledged that a tough fight lies ahead.
Since exiting bankruptcy in August 1999, the privately held company has been plagued by flat-to-dismal sales and a shrinking consumer base that’s steadily defecting to more focused and fashionable competitors such as Kohl’s and Target.
In light of Wards’ flat first-quarter sales, some wary factors even stopped approving the chain’s credit because of concerns that bottom-line-driven GE Capital, which has already invested over $1 billion since acquiring Wards in 1997, might liquidate the chain.
Those fears were partially abated, though, in July when GE gave the 250-unit moderate department store chain a $100 million equity investment to pay down revolving debt and ensure $150 million in trade credit for the all-important fall and holiday selling seasons.
The investment was widely viewed as a vote of confidence for Wards and a much-needed sign that GE will continue to back the chain’s turnaround bid.
Roger V. Goddu, chairman and chief executive officer, said, “GE is pleased with the positive results we’ve seen since Labor Day. If our performance continues on the track we’re on right now, the answer is ‘yes,’ that GE will probably infuse even more capital into Wards.”
Goddu said Wards’ overall comp-store sales for September were ahead by mid-to-high single digits, though apparel was down by mid-single digits. Wards has recently remodeled 76 of its 250 stores and sales at the revamped units are ahead by at least 20 percent, while apparel sales in those stores are up by 10 percent. Total comp-store sales for old-style Wards units are down 4 to 5 percent, with apparel down by similar percentages.
“For the fourth quarter, we’re expecting low-to-mid-single digit sales increases at Wards,” added Goddu, who joined the venerable retailer in 1997.
Goddu predicted that more than half of Wards’ total fourth-quarter volume would be generated by the 76 remodeled stores.
For 2001, Goddu projected Wards’ total volume to rise by mid-single digits, with much of the optimism pinned to the revamped stores.
Such numbers explain why GE Capital and Goddu are hoping that consumers and moderate vendors will give the chain a second chance and check out the new prototypes, which will continue to be unveiled at a rate of 40 to 50 stores per year.
The sleek and dynamic new store model, which averages about 95,000 square feet, is configured in a racetrack design. It’s a layout that spotlights women’s fashions in the center of the store, while fashion accessories and fine jewelry anchor the two main entrances.
A visit to Wards’ newly christened store at North East Mall in Hurst, Tex., a suburb between Dallas and Fort Worth, found a healthy offering of fall’s major trends, including leather, suits and plaid.
Apparel is merchandised on sleek pear-wood racks, tables and modular fixtures, and trends are proclaimed from sophisticated banners and sleekly styled mannequins. Lighting has been increased four-fold, and aisles are wide and easy to navigate. Apparel will eventually comprise about 40 percent of a typical Wards, noted Lou Caporale, executive vice president for women’s apparel and trend merchandising.
The new-store design costs Wards about $1.5 million per unit to implement and newly constructed stores, which are in planning stages, will cost at least $15 million each.
Even though Wards’ marketing strategy is driven by promotions, the chain is offering less discounted merchandise as it fine tunes and upgrades its apparel offerings.
“Wards is not a discounter. We’re strictly focused on mid-tier positioning,” said Goddu. “We’re also being careful, though, not to take the customer too high. Our strategy remains about value.”
Wards’ heightened focus on trends is part of the chain’s concerted effort to lure younger shoppers. It plans to reach consumers with intensified marketing and advertising that will comprise regional ad campaigns in markets that include newly remodeled stores.
But amid all the changes taking place at Wards, the chain plans to stick with its familiar tag line: “You Can’t Shop Smarter Than Wards.”
That’s about all, though, that will remain of Wards’ old-style courting of the moderate shopper. From clean-lined white and red signage to updated shopping bags, Wards wants to let consumers and vendors know that things have changed at the 128-year-old chain.
“There’s good news at Wards, centered on our new-store and merchandising strategies,” said Goddu. “We’re not wavering from our new focus one iota.”